Democrat Senate President Stephen Sweeny (D-Glaucester) along with Senator Loretta Weinberg (D-Teaneck) and other New Jersey Senate Democrats just announced an income tax and business tax hike to address the state's $807 million budget deficit. Initial estimates suggest the plan will raise $1.6 billion in revenue, which would fund next year's pension payment. It wouldn't go to transportation, education, or public safety.
The proposal raises taxes on those earning more than $500,000 and adds a 15 percent business tax surcharge. These massive tax hikes were announced on the same day that one of New Jersey's public employee pensions voted to sue over Governor Chris Christie's plan to defer a $900 million pension payment.
Governor Christie has repeatedly called for additional reforms to deal with the ballooning costs of public employee pension, health benefits, and debt service that are engulfing the budget. In fact, 94 percent of the year-over-year growth from the current budget to the Governor's proposed budget for next year is going to the growth in these things, not education, transportation, or anything else. New Jersey Democrats clearly don't understand that curbing spending with legitimate long-term reforms is the only real solution to a $54 billion underfunded pension crisis.
New Jersey is the next-to-last worst place in the nation to do business. According to the Tax Foundation, it has the highest property taxes in the nation, 9th highest corporate tax, 6th highest income tax, and 4th highest sales tax. The Democrat plan would raise the top income tax rate from 8.97% to 10.75%. Individuals making between $500,000-$1 million would pay 10.25%, up from 8.97%. Only two states impose higher state income taxes: Hawaii at 11% and California at 13.3%.
Clearly Democrats have no interest in promoting economic growth. Instead of reforming the public pensions, they would rather run even more businesses and taxpayers out of the state. Between 1992-2011, New Jersey lost $22.3 billion in annual adjusted gross income to states like Florida, which does not tax income. It also lost more than 429,000 residents. The Democrat plan flies in the face of what neighboring New York (where the governor is a Democrat) was able to accomplish this year: tax cuts. Next year, New York is even poised to move ahead of New Jersey, passing along to them the dead last ranking for a business competitiveness climate.
Governor Chris Christie is the only thing standing in the way of the Democrat plan to turn New Jersey into Detroit. He recently said, "I won't raise taxes on the people of New Jersey to pay for a Cadillac pension system." His proposal would pay $696 million in pension payments out of a scheduled $1.6 billion, and another $681 million next year.
Republicans have an alternative to the Democrat tax hike, which can be read here. It eliminates the proposed tax hikes and prioritizes state spending. Democrats better come up with something else or they may forever seal their fate as clueless in the fight to stop taxpayers and their businesses from fleeing to more friendly states.